3 arrested over dental college's huge investment losses.

YOKOHAMA, Sept. 10 Kyodo

Prosecutors arrested two former directors of Kanagawa Dental College and its former investment adviser Thursday on suspicion of fraud over the college's huge investment losses.

Former directors Kimio Miyake, 61, and Toshiro Shimizu, 71, plus adviser Kenshi Oshima, 45, allegedly swindled the college out of 250 million yen last November, suggesting to it that additional contributions would yield 1 billion yen, the Yokohama District Public Prosecutors' Office said.

The Yokosuka, Kanagawa Prefecture-based college racked up 7.25 billion yen in losses, having entrusting 13 firms with roughly 10 billion yen since September 2005, college officials said. Of the total losses, 5.2 billion yen worth was incurred by three firms run or introduced by Oshima, the officials said.

It is rare for a shady asset management case to develop into a criminal incident.

According to the officials, the college invested about 2.3 billion yen in a Yokohama-based investment firm run by Oshima, 800 million yen in a Tokyo-based firm he introduced to it, and 3.5 billion yen in a Singapore-based firm similarly introduced.

Oshima consulted with the directors and decided the destination of the three firms' investment, they said.

He began managing the college's assets four years ago through the introduction of Miyake, who was in charge of finance, and concluded an investment advisory contract with the school incorporation in August 2007.

Despite initially yielding profits, he has come to make continuous losses, and his firm has begun to fail to report its performance and disband investment funds it was running, they said.

Under Japan's Financial Instruments and Exchange Law, a manager of investor assets is required to register with the Financial Services Agency, but Oshima was found unregistered in the spring and the college canceled their contract.

In an interview with Kyodo News, Oshima denied any wrongdoing, saying, ''I made the investment because the school corporation's board of directors agreed, and incurred losses simply by unsuccessful management.''

The college's eight directors, including those arrested, resigned in June over the losses, and an outside panel of members, including lawyers, is looking into the case.

Taking over the first woman's dental college in Japan, set up in 1910 in Tokyo, the college relocated to Yokosuka in 1963 and has about 1,400 students.

It also runs a junior college, a vocational school for dental technicians and a hospital on the same premises, as well as a hospital in Yokohama.